San Bernardino City Council renews auditing contract

The City Council voted Monday to expand its contract with the firm that audited the city in the years before it filed for bankruptcy and also audited San Bernardino International Airport, despite the firm drawing criticism for both those jobs.

Rogers, Anderson, Malody & Scott would audit the financial statements of the successor to the city's Economic Development Agency for the year that ended in July 2012. The firm had already been approved to audit the city's financial statements for that period.

An audit can be time-intensive, especially without background, and the work fits alongside what the firm is already doing to complete the city's comprehensive annual financial report, city staffers said in a recommendation to the council.

"This continuity is needed to properly represent the collective audited governmental activities reported in the CAFR," the recommendation says.

Given that recommendation, Councilwoman Wendy McCammack moved the item despite saying earlier that the firm "did not reveal things that should have been revealed."

She said at the time that she couldn't say more without risking a lawsuit.

"However, and I say that with emphasis, however, I think going for new (requests for proposals) looking for new auditing firms is critical," McCammack said Monday.

In a separate action Monday, the council approved those requests, which would bring in a new audit firm for the fiscal years ending June 30 of 2013, 2014 and 2015.

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Councilman John Valdivia was the only "no" vote.

"They have a track record here and are complicit, I think, in the whole bankruptcy," Valdivia said earlier this month.

When the city announced last year that it was filing for bankruptcy, City Attorney James F. Penman said budgets were falsified for 13 of the previous 16 years and that laws may have been broken by borrowing from restricted funds and not repaying the debt within a year.

In an interview following that announcement, RAMS partner Terry Shea said audits had reported years of deficit spending but weren't designed to find fraud.

"We don't audit the budget, the preparation of the budget or what's in the budget," said Shea, who was on the team that prepared San Bernardino's Comprehensive Annual Financial Report.

Instead, RAMS makes sure the city's financial statements were free from material misstatement and that controls were in place to prevent fraud, Shea said.

RAMS was hired to analyze the fiscal years ending in June of 2007, 2008, 2009, 2010 and 2011.

The San Bernardino County Grand Jury also criticized the scope of the audit of the airport. RAMS officials said the scope was a decision of the airport board, not the auditing firm.